Question

A company has current assets that total $ 500,000, has a current ratio of 2.00, and uses the perpetual inventory method. Assume that the following transactions are then completed: (1) sold $ 12,000 in merchandise on short- term credit for $ 15,000, (2) declared but did not pay dividends of $ 50,000, (3) paid prepaid rent in the amount of $ 12,000, (4) paid previously declared dividends in the amount of $ 50,000, (5) collected an account receivable in the amount of $ 12,000, and (6) reclassified $ 40,000 of long- term debt as a current liability.
Required:
Compute the updated current ratio, rounded to two decimal places, after each transaction.